Officials oppose rule change to protect local grant funding

July 30, 2012

By Christina Calloway

PNT senior writer

ccalloway@pntonline.com

The funding for projects similar to the street drainage channelization taking place in northern Portales could be in jeopardy under a proposed rule change of Community Development Block Grant rules, city officials say.

After attending a meeting last week in Santa Fe to address the rule change, Portales Public Works director John DeSha says he still recommends city councilors oppose the rule change.

The change would introduce a new program to the state, the Housing and Urban Development's Section 108 loan guarantee program, which offers government entities loans to fund economic development.

According to officials, this would put CDBG money at stake if a government entity were to default on a HUD loan because payment would then come from the city's CDBG fund.

Portales city councilors oppose this rule change because they do not want to have to put up CDBG funds if the city was to default on a HUD loan.

CDBG grants, which primarily fund infrastructure projects in low-to-moderate-income neighborhoods, are essential to the development of Portales neighborhoods, according to city officials.

Prior to the meeting, Eastern Plains Council of Governments Community Development Planner Raymond Mondragon met with councilors to warn them of the rule change at their council meeting.

Mondragon received support from councilors as one of the local communities to oppose the change.

"I believe that there are more questions than answers to HUD," Mondragon said.

DeSha and Mondragon said CDBG funding has already been dwindling from one grant cycle to the next. The state was awarded $8 million in funding this year, down $6 million from the previous grant cycle.

"The small rural communities depend on CDBG to improve infrastructure, road and industrial parks," Mondragon said. "It's important that we continue to keep that economic vitality in the rural communities."

The Community Development Council will vote on the rule change as early as mid-August.